Silver the Osama Effect

Silver gained 500% in two years

NOT ALL that glitters is gold, but silver is another matter Silver always shines despite today's correction . Paraphrasing one of the most abused proverbs, that could be the summary of what happened today in the markets and, in particular, on the commodities market. since the Announcement by the U.S. authorities of the killing of Osama Bin Laden, all commodities prices have started to decline . But the psychological effect on players did not last long, because analysts have noted that the death of Osama - as in the top of the wanted list - is not enough by itself to declare the end of the Muslim-inspired terrorism. Much more important, at this moment, it would not end of the war  in Libya. Thus, gold and crude oil have already rebounded late in the morning, coinciding with the decline of European stock exchanges, which is then accentuated after the start of Wall Street.

But not all commodities have followed the path of gold and oil. That was thew case of silver. Traders have sold futures on precious metals with both hands and in the early stages of the session options causing the silver price to plunge by 12%, the largest decline in its history! . There was then a recovery in the rest of the day, but prices have remained in negative territory.

But how to interpret the trend of the price of silver? The negative reaction is
explained by the fact that silver is one of the more sought after by industry and arms traders, in the early hours after the announcement of the death of Osama,The markets thought that there may be a slowdown in demand for military equipment. In fact, demand is already falling for some time because of the crisis of sovereign debt (states must cut the budget and do so even in the defense sector).

The answer, then, is, as often happens, in a speculative movement. From the lows of 2008 to $ 8.453 per ounce of silver has doubled its value ($ 17,960 / oz) last August, and then accelerate up to $ 49.831 (new top for the last 31 years) just last Monday, with an appreciation almost 500% in two and a half years. The precious metal, which in recent years has suffered a deterioration in demand for industrial use (especially in the field of photography with the advent of digital technology), now seems destined to have a new life. The silver industrial demand may increase due to new uses in the field of photovoltaic solar panels.

In addition, it should be noted that silver is a safe haven by excellence, given its chronic shortage: the world demand exceeded the annual production since 1990.


Related ETFs : Ishares Silver ETF (SLV), SPDR GOld ETF (GLD) , Powershares DB SPDR Gold ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX), GoldCorp (GG)